Harvey continued orchestrating refined products higher and WTI crude lower in yesterday’s trading session. WTI crude closed down $0.13/bbl to $46.44, HO closed up $0.0303/gal to $1.6655, and RBOB closed up $0.0710/gal to $1.7833. As of 9 a.m. EST, HO is trading up over $0.0425/gal, and RBOB is up over $0.11/gal. The rally tailwinds continue as more news about refinery shutdowns are disseminated. This morning it was reported that the nation’s largest refinery, Motiva’s Port Arthur 600,000 barrels per day, is now offline. The total estimate of refining capacity that has been shut down stands at over 4 million barrels. Below is an updated list of U.S. Gulf Coast refineries that have cut production or shut down completely:
Time frame for refineries returning to normal production is still unknown. To note, after Hurricane Katrina, it took as long as two months to return to normal production.
As refineries were the first to be affected by Harvey, disruption to the pipelines was inevitable. Since the refineries have had to cut back production, there is not enough refined products to fill the lines to ship up north. The Colonial and Explorer are the two main pipelines out of Houston that have had to either operate at reduced capacity or shut completely due to lack of supply.
As Harvey has complete control of the energy markets, it is important mention that the API statistics were released last night and the DOE statistics were released this morning. The APIs showed a draw in crude inventories of 5.8 million barrels, gasoline showed a build of 476,000 barrels, and distillates a draw of 486,000 barrels. The DOE Weekly Status Report showed similar statistics. Crude inventories drew 5.4 million barrels, with Cushing inventories building 689,000 barrels. Gasoline built 35,000 barrels, and distillates built 748,000 barrels.
As of 11:30 a.m. EST, Heating Oil is up $0.0375 to $1.7027/gal and RBOB is up $0.1320 to $1.9154/gal. Will we see RBOB get to over $2/gal this week? Only time will tell.